Walmart revives talks with Tatas for retail play

Walmart executives have held meetings with Tata brass to stitch an alliance, which could include a joint venture between the Arkansas-headquartered company and Tata Sons.Reeba Zachariah | TNN | August 21, 2019, 07:23 IST

Highlights

Walmart executives have held meetings with Tata brass to stitch an alliance, which could include a joint venture between the Arkansas-headquartered company and Tata Sons.,

Both want to accelerate their omni-channel or multi-channel retailing play in the world’s sixth largest economy even as rivals Reliance and Amazon are said to be in talks for a similar partnership.,

Days after Reliance Industries chairman Mukesh Ambani announced strong investor interest for his retail business and plans to induct a global partner in the venture soon, a deal is speeding up between India’s largest conglomerate, the Tata Group, and the world’s largest retailer, Walmart.

Walmart executives have held meetings with Tata brass to stitch an alliance, which could include a joint venture between the Arkansas-headquartered company and Tata Sons. Both want to accelerate their omni-channel or multi-channel retailing play in the world’s sixth largest economy even as rivals Reliance and Amazon are said to be in talks for a similar partnership.

Consumer retail is one of the growth engines of the Tata Group and the conglomerate has been consolidating its presence on this front (it has merged Tata Chemicals’ packaged food business with its beverage unit). The vertical, which started with the setting up of Tata Oil Mills Company (Tomco) in 1917, is today spread across multiple companies Tata Consumer Products (includes Starbucks), Titan, Infiniti Retail (Croma), Tata Unistore (Tata CLiQ), Voltas, Trent (Westside, Star Bazaar) and Tata Industries (Tata Smart Foodz).

The alliance with Walmart will be with Tata Sons, said people in the know.

Walmart, which entered India through a wholesale joint venture with Bharti Enterprises in 2007 and subsequently bought out its Indian partner in 2013, made its big move last year by acquiring a 77% stake in India’s largest online retailer Flipkart for $16 billion. Sources said if the US company wants to scale up its India business model and leverage on its $16-billion investment in Flipkart, it will need a local player with a strong offline presence, something Tata brings to the table. The way forward for players is to have a hybrid online-to-offline format.

A Walmart spokesperson said: “As a policy, we don’t comment on market speculations.”

Foreign multi-brand retailers can hold 51% in a joint venture with the Indian government’s approval. Or, they can own 100% through the automatic route in wholesale or cash and carry and food retail provided items are locally sourced and manufactured.

Walmart had held talks with the Tatas when Cyrus Mistry was at the helm but leadership changes at the conglomerate stalled those efforts. Discussions have revived again, said sources. The arrangement will cover a range of operations including sourcing and technical expertise.

The alliance between Tata and Walmart also turns the spotlight on the 11-year-old partnership between Trent and British retailer Tesco. Tesco and Trent have a 50:50 joint venture, which operates 39 Star stores in India. The JV is in the red.

A deal with Tata will help Walmart catch up with Amazon that has built an offline presence through acquisitions. It has acquired stakes in grocery chain More and department store Shoppers Stop. It is in advanced talks to pick up 10% in Kishore Biyani’s Future Retail.

Walmart and Amazon are trying to adapt to India’s evolving retail and technology policy landscape and it helps them to have local partners. Earlier this year, when the government changed the rules for online retail Amazon and Flipkart had to restructure their operations. These changes had rankled Walmart executives and its CEO Doug McMillon had said he was “disappointed.”